BlackRock’s S-1 Filing Signals Potential June Launch for Spot Ether ETF

Jimmy Aki
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On May 29, analysts reported that United States spot Ether exchange-traded funds (ETFs) have a “legit possibility” of launching by June end. This optimism follows BlackRock’s S-1 filing, which includes a key detail necessary for the ETF’s launch.

Analyst Predicts Another Spot Ether ETF Review to “Fine Tune” SEC Comments

BlackRock made a major move towards launching its iShares Ethereum Trust (ETHA) by updating its Form S-1 with the Securities and Exchange Commission (SEC). This update came nearly a week after the SEC approved BlackRock’s 19b-4 filing, which are both necessary steps for the spot Ether ETF to start trading.

The revised BlackRock’s S-1 included information about its seed capital investor, which provides the initial funding for the ETF to begin trading. In this case, a BlackRock affiliate agreed to purchase $10 million worth of shares on May 21, 2024 and received 400,000 shares priced at $25.00 per share.

The news of BlackRock’s progress towards launching an Ether ETF was met with optimism by analysts.

Bloomberg’s ETF analyst Eric Balchunas suggested that the ETF could potentially be listed before the end of June 2024. He anticipated that there might be one more round of fine-tuning comments from the SEC before the launch but still considered an end-of-June launch a legitimate possibility, although he predicted the approval to be around July 4.

Another Bloomberg ETF analyst, James Seyffart, noted that BlackRock’s revised S-1 filing signaled a positive engagement between issuers and the SEC, indicating progress toward launching spot Ethereum ETFs.

In sharp contrast, Hashdex, another issuer seeking approval for a spot Ether ETF, decided to withdraw its application on May 28, a few days after the SEC’s approval. Hashdex’s proposal combined spot Ether holdings with Ether futures contracts in the same product, with the aim of mitigating potential manipulation.

However, the reasons for the withdrawal are unclear, and it remains unknown if Hashdex plans to resubmit its proposal.

It could be recalled that the SEC approval of spot Ethereum ETF applications from various firms, including VanEck, Fidelity, Grayscale, and others, on May 23 paved the way for spot Ether ETFs to be listed and traded on their respective exchanges. This development represents a major step forward in the adoption of cryptocurrency investment products.

Grayscale spot Ether ETF Projected to Record Outflow of $110M

Meanwhile, Grayscale’s upcoming spot ETF could encounter substantial outflows, potentially averaging around $110 million per day, according to a report by analysis firm Kaiko on May 27, 2024.

This projection is based on the observed pattern with Grayscale’s Bitcoin Trust (GBTC) when it converted from a closed-end fund to a spot Bitcoin ETF on January 11.

Following the conversion, the GBTC experienced significant outflows, with 23% of its assets under management (AUM) flowing out in the first month, totaling $6.5 billion.

Grayscale’s Ether Trust (ETHE) currently has an AUM of $11 billion. If it faces similar outflows as GBTC, it could result in average daily outflows of $110 million, which represents about 30% of Ether’s average daily trading volume on Coinbase, as noted by Kaiko.

Recent data has shown that over the past three months, ETHE has traded at a discount of up to 26% compared to its net asset value (NAV). Kaiko researchers highlighted that as ETHE transitions into a spot ETF, it’s reasonable to expect outflows or redemptions as the discount narrows.

About Jimmy Aki PRO INVESTOR

Based in the UK, Jimmy is an economic researcher with outstanding hands-on and heads-on experience in Macroeconomic finance analysis, forecasting and planning. He has honed his skills having worked cross-continental as a finance analyst, which gives him inter-cultural experience. He currently has a strong passion for regulation and macroeconomic trends as it allows him peek under the global bonnet to see how the world works.